Factors Influencing Foreign Direct Investment in the Manufacturing Sector of Malaysia

This study is meant to identify local(country-related) factors that affect foreign direct investment (FDI) in the manufacturing sector of Malaysia. FDI in Malaysia was concentrated in the agricultural and extractive industries until the early post-independent period when efforts to diversify the country's economy were initiated. Generally, industrialization has brought several positive effects however, it also features a few weaknesses such as narrow manufacturing base and manufactured exports and under utilization of local resources. The different rates of investment across the various manufacturing industries in the country can be associated with the pattern of FDI which is concentrated in certain industries such as electrical and textile. Therefore, it is important to conduct a study on factors affecting FDI in Malaysia so that policy-makers can hopefully benefit from the findings of the study in making the appropriate policies to improve the distribution of FDI across the manufacturing industries. Previous studies show that FDI activities can be explained by theory of comparative advantage, industrial organization as well as investment theory. To determine the factors influencing FDI in the Malaysian manufacturing, both quantitative and qualitative analyses were conducted. In the quantitative analysis, gross national product(GNP),level of external reserve (lagged one year), interest rate, manufacturing output/GNP, current profit of foreign controlled manufacturing companies and total asset of local financial systems how significant positive relationship with FDI while public investment rate shows significant negative relationship. The qualitative analysis concludes that economic and social stability; freedom of repatriation; avail ability of efficient labour force; existence of physical infrastructures;efficiency of financial institutions; tariff and trade protection; currency stability; market avail ability; and public sector efficiency are among the roost important determinants of FDI

FDI and Economic Growth in Malaysia

Abstract: This study examines the causal relationship between foreign direct investment and economic growth. Methodology is based on the Toda-Yamamoto test for causality relationship and the bounds testing (ARDL). Time-series data covering the period 1970-2005 for Malaysia, the study found, in the case of Malaysia there is no strong evidence of a bi-directional causality and long-run relationship between FDI and economic growth. This suggests that FDI has indirect effect on economic growth in MalaysiaForeign direct investment, Toda-Yamamoto test, bounds testing (ARDL), economic growth. Malaysia

Dynamic analysis of regional convergence in Indonesia

This study examines income convergence among provinces in Indonesia using dynamic panel data approach. The results show that static and dynamic panel data approaches produce different results of convergence patterns. Consistent with the theory, the Ordinary Least Square (OLS) and fixed-effects estimators provide the upper and lower bounds. The first-differences generalized method of moments (FD-GMM) provides invalid estimators which are lower than the coefficient from the fixed effects estimators due to the weak instruments problem. The system-GMM (SYS-GMM) estimators are found to be unbiased, consistent and valid. They show that convergence process prevails among provinces in Indonesia for the period 1983 – 2003. However the speed of convergence is relatively very slow (0.29) compared to other studies in developing countries

Location decision for foreign direct investment in ASEAN countries (A TOPSIS Approach)

TOPSIS approach is applied to select the most suitable ASEAN countries for attracting FDI inflows. The proposed approach also provides a relatively simple tool for this strategic decision making problem. Within the model, ten indicators are defined as determinants of FDI inflows. By using TOPSIS method, the capacity and attraction of ASEAN countries is evaluated and given final rank for period 2000-2005. Results indicate that Singapore is the most attractive for investment among ASEAN countries while ranking of some countries have changed during these years.Foreign direct investment, ASEAN, Ranking, TOPSIS

Competitiveness of the Malaysian food processing industry

Competitiveness is the goal sought after by governments and private sectors of many developing countries, including Malaysia. The study used net social profits (NSP) at the production level and the Porter diamond approach at the firms’ level to evaluate the competitiveness of 16 food-processing sectors from 2000 to 2008. The results indicate that processed-food industries have a comparative advantage but at a different magnitude. A time trend was fitted to track the dynamic NSP indices where positive trends indicate improvement in competitiveness. The range of NSP indices is quite wide, from RM 1,707.70 for snacks to RM 35.36 for vegetable and animal oils and fats, reflecting the need to improve resource allocation from low to high comparative advantage sectors. The NSP trend and Porter diamond conditions (demand condition, factor inputs, firm strategy and rivalry, and related supporting industries) suggested that the food processing cluster is gaining competitiveness

Optimum currency area criteria and volatility in ASEAN

The goal of regional integration is to promote greater macroeconomic coordination, and reduce the degree of macroeconomic volatility, in particular exchange rate fluctuations. This paper investigates how well optimum currency area (OCA) variables will work in the context of the ASEAN region when the Singapore Dollar, given its relative stability, is used as an anchor currency. The results indicate that OCA variables play an important role in explaining bilateral exchange rate volatility. In addition, exchange rate volatility exerts a negative impact on bilateral trade and gross domestic product (GDP). It is also a source of divergence among ASEAN members

Trade openness and economic growth: a causality test in panel perspective

Openness to trade has been one of the primary drivers stimulating growth.The goal of this particular study is to investigate the relationship between trade openness and economic growth in 87 selected countries which includes both Organizations for Economic Co-operation and Development (OECD) and developing countries for 1977–2011 periods.We used two measures of trade openness i.e. the ratio of trade openness (TO) typically spoke by exports plus imports in nominal value divided by GDP (nominal)which is commonly used in the literature,and trade openness in real(RO)which is defined as the sum of imports and exports in US$relative to GDP in purchasing power parity US$ (real GDP). An empirical studywas conducted to determine the causal relationship between trade openness and growth in a panel perspective.We used a dynamic panel data estimation method i.e. the general method of moments(GMM). The empirical results reveal a bidirectional causal relationship for both developing and OECD countries.Our finding is consistent with the endogenous theory that increased openness leads to higher growth, which thus prompts expanded openness

Competitiveness of Malaysia’s Palm-Based Finished Products.

The palm oil industry is one of the key economic drivers and contributors to Malaysia's national economy. Currently, Malaysian palm oil products are exported to more than 150 countries worldwide. However, the industry faces significant challenges, including labor shortages and declining cultivable lands due to deforestation and environmental degradation concerns. For this purpose, this study aims to assess Malaysia's relative trade competitiveness in palm-based finished products using the Revealed Trade Advantage (RTA). The export of high-value-added downstream products could hopefully help improve the country's export, national income, and overall quality of life. Keywords: Trade Competitiveness; Sustainable Palm Oil; Revealed Trade Advantage; Income Generation.   eISSN: 2398-4287 © 2022. The Authors. Published for AMER ABRA cE-Bs by e-International Publishing House, Ltd., UK. This is an open access article under the CC BYNC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/). Peer–review under responsibility of AMER (Association of Malaysian Environment-Behaviour Researchers), ABRA (Association of Behavioural Researchers on Asians/Africans/Arabians) and cE-Bs (Centre for Environment-Behaviour Studies), Faculty of Architecture, Planning & Surveying, Universiti Teknologi MARA, Malaysia. DOI: https://doi.org/10.21834/ebpj.v7i19.320

Regional development disparities in Malaysia

Achieving balanced regional development will remain as one of the key objectives of national development during the development Plans in Malaysia. Therefore this paper analyses regional disparities amongst major states in Malaysia to find out gap and rank of regional development during two development plan (Seventh and Eighth plan). The paper proposes a new methodology that includes TOPSIS (Technique for Order Preference by Similarity to Ideal Solution) and Shannon entropy for first time in terms of ranking in this field. The empirical results indicate that in terms of regional balance, little progress was made in reducing development gaps between regions during two plans and Wilayah Persekutuan Kuala Lumpur was the most developed region in 2000 and 2005. On the other hand, Sabah was the least developed region in same period